The Ghanaian Cedi posted a mixed performance at the start of the week on both the Bank of Ghana (BoG) inter-bank trading platform and on the Open Forex Market (oanda.com) against its three major trading partner currencies. The local currency has remained under intense pressure against the US Dollar, the British Pound Sterling and the Euro in the first month of the year as demand for forex by importers and body corporates continue to remain strong, outstripping the supply of forex by the central bank. Calls by industry players for the government to implement policies that will be targeted at encouraging the production of imported goods locally while adding value to exports as a sustainable means of driving exports and reducing imports in a bid to strengthen the local currency have heightened after the Cedi ended the 2018 with a year-to-date depreciation of 9.15% against the US Dollar.
According to the governor of the central bank, giving support to the local currency came at a cost to the nation’s Gross International Reserves (GIR). Dr. Ernest Addison explained that “you need to make a judgement; a little bit of reserve reduction in order to save the currency. But you also don’t want to lose all your reserves in trying to save the currency. It is important not to unwind all the gains we achieved last year.” The governor also revealed at the conclusion of its first Monetary Policy Committee (MPC) for the year that the BoG used a little above USD 650.00 million between 2017 and 2018 in stabilizing the Cedi. The Cedi is however expected to receive a boost from offshore investors’ participation in the government’s recent 6-year fixed rate bond which came at a yield of 21.0%.
On the BoG inter-bank trading platform, the Cedi built on previous weeks’ losses against the US Dollar and the Euro but came in strong to recover part of previous weeks’ losses against the British Pound Sterling. It depreciated by 0.19% and 0.22% to begin the week at GHC 4.9550 and GHC 5.6653 from previous week’s trading values of GHC 4.9454 and GHC 5.6530 against the Dollar and the Euro respectively. It however, gained 0.79% against the Pound to trade at GHC 6.4692 at the start of the week from previous week’s trade figure of GHC 6.5185 after the British Parliament rejected an amendment’s to delay Brexit. The Pound fell against its peers and the Cedi after UK lawmakers voted down a proposal placed before parliament that could have prevented a potentially disordered “no-deal” Brexit. Investors sold the Pound as they interpreted the development as a risk to the Brexit negotiations.
On the Open Forex Market (oanda.com), the Cedi depreciated by GHC 0.72% and 0.92%, week-on-week, against the US Dollar and the British Pound Sterling respectively. It began the week at GHC 4.9896 and GHC 5.7097 against the Dollar and the Euro from previous week’s trading values of GHC 4.9539 and GHC 5.6577 respectively. The Cedi lost to the greenback following the reopening of the US government after a record-long shutdown. The Dollar was also supported by economic data which showed that non-farm payrolls jumped by 304,000 jobs last month, the largest in eleven months, and exceeding forecasts of 165,000 jobs. Against the British Pound Sterling, the Cedi gained 0.12%, week-on-week, to trade at GHC 6.5179 at the start of the week from previous week’s trade values of GHC 6.5257.
According to the Bank of Ghana inter-bank rates, the Ghanaian Cedi began 2019 at GHC 4.8291 [January 2nd, 2019] against the US Dollar and is currently selling at GHC 4.9550 [February 4th, 2019] indicating a 2.61% year-to-date depreciation. Similarly, on the Open Forex Market (oanda.com), the Ghanaian Cedi traded at GHC 4.8780 [January 2nd, 2019] and is currently trading at GHC 4.9896 [February 4th, 2019], representing a 2.29 % year-to-date depreciation of the Cedi against the US Dollar.